Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.

Inventories       

Raw materials $30,000  $54,000

Work in process 9,200   21,000

Finished goods 60,000   34,800

Activities and information for May       

Raw materials purchases (paid with cash)     181,000

Factory payroll (paid with cash)     250,000

Factory overhead      

Indirect materials     11,000

Indirect labor     57,500

Other overhead costs     95,500

Sales (received in cash)     1,200,000

Predetermined overhead rate based on direct labor cost     55%

Left hand side is May and right hand side is June.

Find

1. Direct Labor Usage

2. Indirect Labor Usage

3. Total Payroll Paid in Cash

Answer 1

General Journal	Debit ($)	Credit ($)
Work-in-process Inventory	192,500
Factory Wages Payable		192,500
[Entry to record the Direct Labor Usage] [$250,000 - $57,500]
Factory Overhead	57,500
Factory Wages Payable		57,500
[Entry to record the Indirect Labor Usage]
Factory Wages Payable [$192,500 + $57,500]	250,000
Cash		250,000
[Entry to record the Total Payroll Paid in Cash]